Friday, November 12, 2010

IEA admits Peak Oil, say we already passed it.

The International Energy Agency notes in its 2010 World Energy Outlook that crude oil production peaked in 2006, as shown in slide 8 from their press release:

click for large image

Interestingly, Kenneth Deffeyes and Matthew Simmons both stated that PO arrived in December 2005. In another interesting find, Nafeez Ahmed relates that Dr. Colin J. Campbell, formerly of BP, has written that oil production peaked between 2005 and 2008. One notes when looking at the above graph that the IEA makes a big assumption, i.e. overall crude oil production will remain constant due to fields yet to be developed or yet to be found! In fact, if you look at the same graph in the report itself, you'll find that if you add in just "fields to be developed" conventional crude still declines, the only thing that keeps it constant is an increasing amount of oil fields "yet to be found"!

Considering that oil field discoveries themselves peaked  45 years ago, that second assumption is pretty amazing and fanciful. You'll also note that they still have oil production overall rising, due to an assumed increase in unconventional oil production and constant natural gas liquid supply. In short, the IEA admits Peak Oil exists and has already hit, but then say don't worry, things will work out - somehow. The Oil Drum does a good job dissecting the report and calling BS on their assumptions.  Make sure to check out the comments on unconventional natural gas, i.e. shale gas.

Coming on the heels of a U.S, DoD report warning about PO and another more publicized report from the German military it seems that Peak Oil may be starting to become mainstream, may being the operative word. Considering the human capacity for denial, we will probably not see widespread acknowledgment until we reach a price crunch. Even then, the left wing and right wing will blame it on Big Oil price gouging and over-regulation respectively.

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